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Convert All RDP Housing to Full and Unrestricted Freehold Title

In this article, Leon Louw, takes a closer look at the challenges related to providing low-cost housing, known as ‘RDP houses’, to black South Africans

Monday 8 August, 2011 - 14:40

Wouldn’t it be wonderful if black South Africans had equal rights, if they enjoyed the same home ownership rights as whites, if they were emancipated, empowered and trusted, if they were presumed to be the equals of whites and no longer patronised? Wouldn’t we rejoice if racism was ended, not just racism by whites against blacks, and blacks against whites, but racism by blacks against blacks? Imagine a world in which blacks stop treating blacks as if they are inferior and think they should no longer live under patronising laws which deny them the right to own and deal freely with their land.

Much fuss is made when blacks who get RDP houses that cost R50 000 or more sell them for R10 000. But, no spontaneous outrage erupts when politicians and officials announce with pride and glee the repossession of houses or farms from blacks who were not using them to their satisfaction, or who were not in personal occupation. It would make headline news if whites were treated like this.

This is not recycled news from the 1960s apartheid years, but, this is now, in the new 2011 aspirantly non-racial, post-apartheid South Africa.

Why is there no outrage expressed, because racism is so ubiquitous that one of its most extreme manifestations is going unobserved and unquestioned? Bureaucratic inertia may explain, but it does not excuse why racially inferior land tenure inherited from apartheid is not being converted into full freehold title. Failure to do so is continuing and prolonging the Verwoerdian legacy of giving toxic RDP and redistribution title to blacks in the new South Africa and is perpetuating and exacerbating the problem.

Since 1994, about three million RDP houses have been allocated to black South Africans. Most or all are subject to racially discriminatory, restrictive and pre-emptive conditions. The two most common are (a) an eight-year prohibition on selling or letting, and (b) a condition that there may be only one dwelling per property. Both seem reasonable at first, but, as everyone who has anything to do with ‘black townships’, ‘locations’ and ‘informal settlements’ knows, the real world bears virtually no relationship to the fantasy world of planners and legislators. Experts and land audits suggest, but no one actually knows, that one half to three quarters of all RDP and other township houses are not occupied by official beneficiaries; most, in some areas virtually all, have illegal tenant shacks in the yard; and properties have been unlawfully sold, let or developed.

All major political parties have been reported as having taken back such housing. Not one major political party has been reported as calling for blacks in ‘black’ areas to enjoy the same ownership rights as blacks who own property in ‘white’ areas. This is especially curious since presumably no one wants the status quo in which most blacks live under virtual house arrest.

Most blacks are faced with the following intolerable choice: if they can get a job somewhere other than where they happen to live, which is the norm, they have to remain unemployed or abandon their most valuable asset, their house. If they choose to abandon an RDP house, it is reallocated to the next person on the waiting list (or, some believe, the next person to pay a suitable bribe), and they never get another, regardless of how compelling their reason might be for leaving. In short, they have to choose between being housed or employed. If they choose to remain unemployed, they will probably lose their house anyway because they won’t be able to afford to maintain it or pay property taxes.

Most blacks ignore their lawful options and sell or let their RDP or other township house ‘informally’. Since the law prevents them from having secure or tradable title, they are forced to sell or let at massively discounted ‘black market’ prices. New occupiers live in a state of permanent fear that they might be caught and, with their belongings, summarily evicted onto the sidewalk.

Because of the discretionary and clandestine allocation of RDP houses, there is real or suspected corruption. In some areas people at the bottom of the list believe they will never rise to the top unless they bribe housing officials.

A common objection to black titling is that recipients of RDP housing will dispose of their houses, pocket the cash, and become homeless once more. The most conspicuous thing about this objection is that it is never raised against white rights. Why is it assumed that blacks are incapable of behaving responsibly? Why is it not assumed that people of all races who sell or let their most valuable asset do so after careful consideration? They might need the money more than the house for a host of legitimate reasons: relocating to somewhere with better employment prospects, starting small businesses, educating children, or health care.

Perhaps the most bizarre aspect of this objection is the assumption that RDP houses disposed of by initial beneficiaries remain unoccupied. In truth, other blacks move in. For various reasons, the new occupants are likely to be more suitable: they have the resources to maintain or improve the house; they have upgraded from living in a slum; or they have moved to be near their place of employment.

The propensity for freely tradable assets to gravitate rapidly into optimal hands when markets are free is the ‘Coase Theorem’, according to which there is no need to anguish about the initial holder of assets. Provided there is no restriction on assets being exchanged, they will soon end up in optimal hands.

By far, the most important first step that needs to be taken if the problem – or is it a national crisis? – is to be solved, is for the highest levels of government to decide to uproot apartheid tenure once and for all. The decision fully backed and appreciated by the Cabinet, and purposefully championed by the President, should be to immediately discontinue restrictive and pre-emptive RDP housing conditions. The effect would be that, all new RDP beneficiaries would get full non-racial (white equivalent) title and property rights and will no longer be racially denied.

- Leon Louw, the Executive Director of the Free Market Foundation, has campaigned for more than three decades, starting in the depths of the apartheid era, for secure property rights for black South Africans. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.